Research On The Credit Risk Of China’s Rural Banking Financial Institutions

With China’s rural financial improvement and sustainable development, therural banking financial institutions have provided important financial support for aneffective solution to the issues concerning agriculture, countryside and farmers.Meanwhile, more and more financial risk problems are also emerging, especially thecredit risk has become the most concerned issue of the community. The effectivesupervision and effective prevention of the credit risk will play a decisive role to thestable and healthy development of the rural banking financial institutions. Thus,research on the credit risk of China’s rural banking financial institutions has a veryimportant theoretical and practical significance. Besides, using a combination ofqualitative and quantitative methods of analysis for the credit risk of China’s ruralbanking financial institutions would contribute greatly to the further study.From the focus on the level of credit for the credit risk of China’s rural bankingfinancial institution, the credit risk can be divided into four parts, which are thecredit risk of asset concentration, the credit risk of asset quality, the credit risk ofasset guarantee and the credit risk of asset migration. According to the creditcharacteristics of China’s rural financial institutions, the four credit risks haverespectively different sub-risks. Based on a comprehensive analysis of the causes ofthe credit risk of the rural banking financial institutions, Analytic Hierarchy Processand Fuzzy comprehensive evaluation method are used to evaluate and analyze fromthe internal and external to the credit risk of the rural banking financial institutions.The evaluation of the credit risk by the Analytic Hierarchy Process, shows theweights of various risk indicators in the internal hierarchy of the credit risk, and theevaluation results indicates that the greatest impact on the credit risk is the creditrisk of asset quality; through the fuzzy comprehensive evaluation method on theoverall condition of the credit risk shows that although the credit risk of the ruralbanking financial institutions runs well, it still needs to strengthen the prevention.Focus on the evaluation results of the credit risk combined with the causes of thecredit risk, the credit risk of China’s rural banking financial institutions should takea combination of both short-term and long-term control measures, the short-termmeasures focus on continuing to improve the quality of credit assets, improve theviability of the rural mortgage-backed system and improve the credit riskmanagement accountability system; the long-term countermeasures mainly are: toremain stable and sustainable macroeconomic policies, to speed up the perfectunified credit system network, to establish the rural credit risk prevention system,and to actively promote rural financial innovation. The effective implementation of these countermeasures will play key role to help China’s rural banking financialinstitutions to prevent from and mitigate the credit risk, and to maintain the ruralbanking financial institutions’ operation and sustainable development in advancing.